* U.S. stocks turn lower following Fed minutes
* Fed emphasizes consistency in trimming stimulus program
* Dollar rises, erasing earlier losses
* Crude oil up on expectations for lower stockpiles
By Ryan Vlastelica
NEW YORK, Feb 19 Stock markets around the world
fell on Wednesday, with declines accelerating after minutes from
a U.S. Federal Reserve policy meeting showed members supported
continued tapering of the central bank's bond-buying program
barring a significant change in the economy.
The dollar rose following the release of the minutes from
the Fed's last policy meeting, while gold prices fell for a
second straight day.
At the meeting, the Fed ultimately decided to make a second
modest cut to its bond-buying program, which now runs at $65
billion per month. It made the move despite turmoil at the time
in emerging markets brought on in part by the withdrawal of Fed
"This market is trading at nosebleed levels and so it will
not have a huge tolerance even for news that can be shaded in a
bad direction," said Uri Landesman, president, Platinum Partners
in New York, noting that equities had scaled recent highs in
part based on a belief the Fed would slow down its retracement
"I think people are looking for any sign the Fed feels it's
finally time we started reeling this endless line in."
Recent U.S. data, including figures on the housing and labor
markets, has come in below forecasts, though many analysts
chalked the weakness up to severe winter weather.
The Dow Jones industrial average was down 89.84
points, or 0.56 percent, at 16,040.56. The Standard & Poor's 500
Index was down 12.01 points, or 0.65 percent, at
1,828.75. The Nasdaq Composite Index was down 34.83
points, or 0.82 percent, at 4,237.95.
The CBOE Volatility index, often referred to as Wall
Street's fear gauge, rose 11.75 percent.
European shares closed 0.1 percent higher while the
MSCI World index lost 0.4 percent after earlier
The benchmark 10-year U.S. Treasury note was
down 6/32, with the yield at 2.732 percent.
The U.S. dollar index, which measures the dollar
against a basket of major currencies, rose 0.2 percent after
hitting its lowest level in 2014 overnight.
The euro rose as high as $1.3773, its strongest level
since Jan. 2. The dollar later gained some ground, leaving the
euro trading at $1.3737.
Dealers have been surprised by the euro's resilience given
speculation the European Central Bank will have to ease policy
further to avert the risk of deflation.
"One could expect that if the real economy is getting up and
if we see that in Germany wage increases are quite substantial,
there might be a certain self-correcting trend" in inflation,
ECB member Ewald Nowotny told Reuters. "So we will see whether
this needs some specific action or whether ... there would be a
merit for waiting."
The emerging markets focus remained on rising unrest in both
Ukraine and Thailand. Ukraine's sovereign bonds and
currency both tumbled as a renewed wave of violence hit the
capital Kiev, adding pressure on Russia's rouble, which hit an
all-time low against the euro.
The rouble's weakness stemmed mainly from the
Finance Ministry's plan to buy foreign currency to replenish one
of its sovereign wealth funds. Moscow shares also fell
In Asia, Japan's Nikkei ended off 0.5 percent,
following Tuesday's 3 percent rally after the Bank of Japan
decided to expand a scheme to encourage more bank lending.
Dealers also kept a careful eye on China's central bank
after it drained funds from the money market on Tuesday, though
it took no new action on Wednesday, helping the Shanghai market
bounce 1.1 percent.
The People's Bank of China is trying to engineer a gradual
upward shift in the cost of money to encourage companies to
deleverage and discourage high-risk shadow banking activity,
though investors are anxious it could hurt growth.
In commodity markets, gold fell 0.8 percent while
copper slid 0.2 percent. Brent crude was flat
while U.S. crude futures rose 1 percent on forecasts of
lower crude and oil products stockpiles due to new pipeline
capacity and robust winter demand.